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Guide to starting a business out of your home

Editorial Team

6 min read

When COVID-19 became a global pandemic, millions of Americans suddenly found themselves either without a job or working from home for the first time.1 The transition was challenging, but for many, it proved you don’t always need to be in an office environment to do your job.

This has helped some people realize that with the right idea and execution, starting a business out of your home is possible. Becoming your own boss can introduce a host of challenges. These hurdles aren’t insurmountable. That said, it’s important to factor them into your decision-making process. Below are 10 helpful tips to keep in mind when starting and operating a business out of your home.

1. Don’t quit your day job (yet)

Because you don’t know how long it will be before you generate enough revenue to be sustainable, it may be a good idea to hold onto your current job, if you have one, until you are in a comfortable place and have the cash flow to cover expenses, including your salary. At the very least, make sure you have enough savings to get through the lean times that nearly every entrepreneur faces in the beginning.

2. Make sure there’s demand

There must be demand for whatever it is you’re trying to sell. This applies to any venture – whether you are a Silicon Valley startup or a single parent running a business out of your house. Be sure that your new business idea solves an actual problem that people encounter.

Consider asking friends and family for input. Another strategy is to develop a streamlined prototype that you can shop around with prospective buyers. If this “minimum viable product” doesn’t convert, then this indicates you have more refining to do.

3. Understand permits, zoning, and taxes

Once you get a few interested customers, it’s time to make your business more official. This involves:

  • Applying for an Employer Identification Number (EIN). You’ll need one even if you don’t plan on hiring employees in the future
  • Securing any relevant permits, licenses, or zoning approvals

Having this paperwork will help facilitate many of the steps below. Being “official” also makes it easier to qualify for tax deductions.

4. Decide whether insurance is necessary

If you decide to launch an eCommerce store, running a business out of your home can be relatively easy. You can manage all of your operations from a computer. If you plan to provide services or goods in person, decide where and how you’ll interface with customers.

Your home might be the right fit – assuming you feel comfortable inviting strangers inside. Still, you may need to buy a dedicated business insurance plan that covers potential accidents and injuries in your home or out in the field.

5. Stay as lean as possible

When running a business out of your house, try to keep expenses to a minimum. Rather than hire full-time employees, for example, you may want to consider using short-term contractors. The same goes for any software, equipment, or other business tools. If you can lease these instead of buying them, you’ll have more money to invest elsewhere.

6. Dress for success

Having the flexibility to wear whatever you want can be an attractive aspect of starting a business out of your home. However, clothes have symbolic meaning. According to science, what you wear can affect your thinking, productivity, and creativity. Pajamas and slippers may be tempting, but surprisingly, wearing casual or formal business attire may increase confidence and lead to higher productivity.2

7. Set clear boundaries

If you’ve already been working from home because of the pandemic, you understand the importance of having a dedicated space and time to do your job. This is especially true if you have a spouse, children, pets, roommates, or elderly parents who are at home with you.

When running a business out of your house, boundaries become even more important. If you can’t design the right environment at home, you may need to explore other options.

8. Be your own boss

In any article about how to run a business out of your home, there’s usually a line about being your own boss. While there are certainly perks that come with the job title, there are plenty of challenges, too. For example, you’re now 100% responsible for deliverables, administration, and getting paid. This means you have to push yourself at all times. To help increase productivity, set a morning alarm, disable social media notifications, and keep all distractions to a minimum.

9. Decide how to get paid

Whether by cash, credit card, or personal check, you need a way for customers to pay for your goods or services. As a general rule, provide as many payment options as possible. Doing so helps you capture the largest pool of potential customers. Picking the right payment processor can help facilitate payment flexibility. Some of the ways you can accept payments include:

It’s important to choose a provider that specializes in PCI-compliant data security. Doing so is crucial for helping to protect your business and customers from payment fraud.

10. Remember to stay social

Operating a business out of your home can be liberating, but remember that you’ll be working many long hours — often by yourself. It’s more important than ever to weave social interactions into your daily routine, whether you join a book club, volunteer at a local food bank, or host more dinners with friends. Doing so also gives you the opportunity to network with others and possibly form new customer and/or vendor relationships.

Have more questions about how to run a business out of your home?

At Clover, we specialize in point-of-sale and payment solutions for small businesses. To learn more about our complete suite of small business and payment processing solutions, schedule a consultation with a Clover Business Consultant today.

This information is provided for informational purposes only and should not be construed as legal, financial, or tax advice. Readers should contact their attorneys, financial advisors, or tax professionals to obtain advice with respect to any particular matter.

1 “How the Coronavirus Outbreak Has – and Hasn’t – Changed the Way Americans Work,” Pew Research Center, 9 December 2020

2 “The Scientific Reason Why Dressing for Success Works (With a Twist, Of Course),” The Muse

Editorial Team

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